TB Wise Multi-Asset Income was launched in October 2005 as a multi-asset income fund, which can invest in all income-producing assets, including shares, commercial property, fixed interest, private equity and infrastructure, anywhere in the world. We maintain a value approach to assets, buying quality where we see it offered below what we consider fair value.

Within this overall remit, we have gradually adopted an overweight position in UK assets, particularly shares, as the continuing uncertainty and turbulence of Brexit have created an unusual value opportunity. As is often the case, low valuations go hand-in-hand with high dividend yields.

As fund managers, we are comfortable with the fund’s current positioning, as it offers investors a high level of dividend yield, together with the prospect of capital appreciation as the portfolio assets recover to more normal valuation levels. However, we have to accept that in the short term our UK assets are sensitive to daily changes in sentiment around Brexit. On days when the market expects an earlier resolution or a softer Brexit, Sterling rises, the market in UK domestic shares rallies and the fund performs well. Conversely, when expectations of a harder Brexit or a longer period of uncertainty predominate, the fund lags the overall market.

In 2019 to date, the fund performed strongly in January and lagged behind the UK stock market in February until the last week, when it performed strongly again. The resulting numbers for February were a little disappointing but have been strong for the year to date as a whole. It is interesting to note that domestic companies’ shares have begun to recover before the emergence of any certainly on the withdrawal agreement, and while a chaotic ‘no-deal’ exit remains possible.

The numbers are as follow: for the month of February, the fund made a total return of 0.87%. The Cboe UK All-Companies index, a proxy for the UK stock market, was up 2.51%, and the average fund in our sector, the IA Flexible sector, was up 1.39%. For the year to date, the fund has made an overall return of 7.46%, compared to the Cboe index, up 6.83%, and the IA Flexible sector average, up 4.95%.

After the market slump in the last few weeks of 2018, we believed that all the assets in the fund were cheap, in the technical sense of being well below our calculation of their fair values. The re-rating we have seen in the first two months of 2019 has been lop-sided, with Legal & General, the fund’s largest holding, up 27%, and Savills up 35%. Some of the other assets have not re-rated at all, while others have continued falling. We take this as an encouraging sign, believing that the assets whose prices haven’t started to recover yet have just as much recovery potential as the ones where we have already seen big gains.

TB Wise Multi-Asset Income went ex-dividend on March 1st. The estimated dividend for the B Income shares is 1.125p, which is the fund’s highest ever dividend for the December to February quarter. The annual dividend yield on the fund, calculated as the last four quarterly dividend payments divided by the fund price on March 1st, was 5.57%. Investors who paid £1.00 per unit at launch and take income have received 71.2p so far in dividends. The fund aims to provide an attractive and steadily rising income, and to use short-term market turbulence such as has been generated by anxiety over Brexit to the advantage of investors by taking advantage of the longer-term opportunities it presents.

Tony Yarrow 28 Feb 2019
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